Sri Lanka tobacco monopoly profit down, tax hike reduces sales
ECONOMYNEXT- Sri Lanka’s Ceylon Tobacco Company Plc (CTC) posted net profits of 3.6 billion rupees for the September 2018 quarter, down 7.4 percent from a year earlier after a tax increase in August.
Interim financials released to the Colombo Stock Exchange said that the firm’s indirect tax contributions through excise duty and other levies fell 8.9 percent from a year earlier to 25.5 billion rupees.
CTC, a unit of British American Tobacco, said that its quarterly cigarette sale volumes fell 14.2 percent from a year earlier due to the tax increase.
The firm’s September quarter earnings per share were 19.46 rupees. For the nine months ending September, earnings per share were 62.67 rupees, with profits up 16.3 percent from a year earlier to 11.7 billion rupees.
CTC’s revenue for the quarter, inclusive of sales tax, fell 8.6 percent from a year earlier to 33.1 billion rupees.
Raw material costs were down 29.7 percent to 601 million rupees. Operating expenses were also lower.
Pre-tax profit fell 1.4 percent to 6.3 billion rupees.
CTC said that low taxed tobacco products such as beedi, and smuggled cigarettes are reducing sales of regulated tobacco, costing government revenue.
"The smuggled illicit cigarette market is estimated to be over 500 million illicit cigarettes per annum with an estimated loss of 20 billion rupees to government revenue," the firm said.
"The trend is expected to grow due to widened gap between the prices of legal cigarettes, beedi and illicit cigarettes available in the market due to current macroeconomic factors impacting consumer spending power." (Colombo/Nov12/2018)